A global pandemic has always been a possibility. For years, governments around the world have had plans about what to do should a virus like coronavirus strike. Yet as the crisis unfolded, it quickly became clear that plans fell miles short of what was needed. The best economic model in the world could not have forecast when the pandemic would strike, and so when it came, we were not prepared.
The new book by Mervyn King, former Governor of the Bank of England, and John Kay, a leading British economist, could hardly have been more timely. Radical Uncertainty: Decision-making for an unknowable future, published in March, explains why relying on probabilistic reasoning via computer models to forecast the future is unsuitable and sometimes harmful. There are events that are 'radically uncertain' that we will never be able to predict.
Rather than treating what comes out of models as if they were truths about the world, where invented numbers offer false security, the authors say we should construct robust narratives to understand ‘what is going on here’. Such narratives should yield confidence to manage uncertainty, and are based on our knowledge of context and our ability to interpret it.